His written testimony prepared for a hearing on Wednesdaygives a few more details about what went wrong, and what thenation's largest bank by assets plans to do about it.

Dimon does not, however, give an update on whether thelosses have grown beyond last month's $2 billion estimate.

Known for smoothly navigating JPMorgan Chase & Cothrough the recent financial crisis, Dimon will appear beforethe Senate Banking Committee to tell lawmakers that the tradingloss is an isolated incident and that the bank is in solidshape.

"Our fortress balance sheet remains intact," he said. "Whilethere are still two weeks left in our second quarter, we expectour quarter to be solidly profitable."

Dimon is contrite in his testimony, saying that "we feelterrible" that the bank has lost some of shareholders' money.

But he makes clear his view that the bank's size was not thecore problem but an asset, a rebuttal to some critics who haveseized upon the incident as evidence that some banks are too bigto manage.

"In short, our strong capital position and diversifiedbusiness model did what they were supposed to do: cushion usagainst an unexpected loss in one area of our business," hesaid.

Dimon first flagged the trading losses last month, when heannounced on a surprise May 10 conference call that a hedgingstrategy by the bank's Chief Investment Office (CIO) in Londonhad gone awry and produced at least $2 billion in unexpectedtrading losses.

The surprising admission, from a bank previously praised forits ability to manage risks that have felled its competitors,has also prompted questions about whether regulators canadequately oversee a bank as large as JPMorgan.

Analysts have estimated the losses could reach $5 billion,based on market talk about the exact trades.

Even at $5 billion, the loss would not be debilitating forthe company, which last year spent $3.2 billion on litigationand still made a $19 billion profit.

A central part of the hearing is expected to be whetherbank executives and regulators can spot risks before they growto the point of damaging the institution and the broaderfinancial system.

Dimon avoids wading deeply into the debate in his four-pagetestimony but he will likely be called on to do so Wednesday bysenators who say the incident shows Wall Street banks remain athreat to the economy.

Senators are also sure to press Dimon on whether he believesnew trading restrictions, known as the Volcker rule, would haveprevented the bank from engaging in its failed hedging strategy.

Dimon has been critical of this crackdown on banks'proprietary trading.

PROBLEMS STARTED IN JANUARY

Dimon laid out more details in his testimony about thegenesis of the trading strategy and how it went wrong, and isexpected to be asked for more information during the hearing.

"How can a bank take on 'far too much risk' if the point ofthe trades was to reduce risk in the first place?" SenateBanking Committee Chairman Tim Johnson said in remarks preparedto be delivered at Wednesday's hearing. "Or was the goal reallyto make money?"

Dimon portrays the losses as the result of miscalculationsand failures of oversight related to the bank's decision toreduce the amount of risky assets it held in order to preparefor the rollout of new capital standards agreed to as part ofthe international Basel agreement.

Dimon said the bank could have simply reduced the amount ofthese risky assets on its books but the CIO office instead,starting in mid-January, "embarked on a complex strategy" thatinvolved adding positions traders believed could offset theexisting risky assets.

"The strategy was not carefully analyzed or subjected torigorous stress testing within CIO and was not reviewed outsideCIO," Dimon said.

Faced with mounting losses in March and early April, Dimonsaid, the traders did not retrench but instead viewed the lossesas "the result of anomalous and temporary market movements."

"In hindsight, CIO's traders did not have the requisiteunderstanding of the risks they took," he said.

Nancy Bush, a veteran bank analyst and contributing editorat SNL Financial, said Dimon's testimony raises questions abouthow losses could have become so large if the trading strategyonly started in January.

"You would really have to be piling the positions on," shesaid. "He will have to explain that."

In the wake of the loss, Ina Drew, who headed the CIO unitresponsible for the trading debacle, has resigned from JPMorgan.

Dimon in his testimony seeks to reassure that the bank hasmade "real progress" in managing and reducing the riskassociated with these trading positions.

"While this does not reduce the losses already incurred anddoes not preclude future losses, it does reduce the probabilityand magnitude of future losses," he said.

JPMorgan has shed more than $26 billion in market valuesince the losses were announced.